Congressional Republicans filed a 57-page bill outlining Speaker of the House John Boehner’s two-step plan to raise the debt ceiling by $2.5 trillion. The first step raises the debt ceiling by $1 trillion and is contingent on 10-year savings of $1.2 trillion from annual appropriations bills, and the second step would raise the debt ceiling by $1.6 trillion after an additional $1.8 trillion in savings in cuts from social safety net programs. It is unclear if it would have the votes to pass the House, and it likely has no chance of passing in the Senate.
The plan does many things. This plan creates another default crisis next year, right in the middle of the Republican presidential primaries. It is far from a balance plan, which is what the majority of Americans want, as it raises no new revenue. It will result in deep cuts in the social safety net, and could dramatically change Social Security and Medicare. The plan would still likely mean a downgrade of the United States’ AAA credit rating, unlike the plan proposed by Senate Majority Leader Harry Reid. It’s a plan that does many things, but solve the problem.
The Center for Budget and Policy Priorities analysis of the Boehner plan characterizes it as “tantamount to a form of class warfare,” and that if enacted it could produce the “greatest increase in poverty and hardship produced by any law in modern U.S. history.”
“The first round of cuts under the Boehner plan would hit discretionary programs hard through austere discretionary caps that Congress will struggle to meet; discretionary cuts thus will largely or entirely be off the table when it comes to achieving the further $1.8 trillion in budget reductions. As Speaker Boehner’s documents make clear, virtually all of the $1.8 trillion would need to come from cuts in entitlement programs. (Cuts in entitlement spending totaling more than $1.5 trillion would produce sufficient interest savings to achieve $1.8 trillion in total savings.)
To secure $1.5 trillion in entitlement savings over the next ten years would require draconian policy changes. Policymakers would essentially have three choices: 1) cut Social Security and Medicare benefits heavily for current retirees, something that all budget plans from both parties (including House Budget Committee Chairman Paul Ryan’s plan) have ruled out; 2) repeal the Affordable Care Act’s coverage expansions while retaining its measures that cut Medicare payments and raise tax revenues, even though Republicans seek to repeal many of those measures as well; or 3) eviscerate the safety net for low-income children, parents, senior citizens, and people with disabilities. There is no other plausible way to get $1.5 trillion in entitlement cuts in the next ten years.”